EDITORIAL NOTE: This article is the second installment of an 8-part series exploring the constitutionality of the PTAB under the public rights doctrine. To begin reading from the beginning please see: Patent Review in an Article I Tribunal is Unconstitutional.
Congress and the PTO justify the IPR program by relying on the public rights doctrine. Emanating from a pre-Civil War case, the public rights doctrine creates an exception to adjudication between private parties in Article III courts. Originally conceived to supply a separate forum for determination of claims involving the federal government as a sovereign power, the public rights doctrine has grown since its original application to the federal government as a party to a dispute. Note the analyses of Rothwell, M., Patents and Public Rights: The Questionable Constitutionality of Patents Before Article I Tribunals After Stern v. Marshal, NC J of Law and Tech, Vol. 13, Issue 2, Spring 2012 and Rothwell, M., After MCM, a Second Look: Article I Invalidation of Issued Patents for Intellectual Property Still Likely Unconstitutional after Stern v. Marshall, NC J of Law and Tech, Vol 18, May 2017.
Murray’s Lessee (1856)
The public rights doctrine originates in Murray’s Lessee v. Hoboken Land and Improvement Co. (59 U.S. 272 (1856)). While private rights ought to be adjudicated in accordance with common law in Article III courts, according to Murray’s Lessee, Congress may allow adjudication of claims against the U.S. in an administrative agency.
“To avoid misconstruction upon so grave a subject, we think it proper to state that we do not consider Congress can either withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty, nor, on the other hand, can it bring under the judicial power a matter which, from its nature, is not a subject for judicial determination. At the same time, there are matters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them, and which are susceptible of judicial determination, but which Congress may or may not bring within the cognizance of the courts of the United States, as it may deem proper. Equitable claims to land by the inhabitants of ceded territories form a striking instance of such a class of cases; and as it depends upon the will of Congress whether a remedy in the courts shall be allowed at all, in such cases, they may regulate it and prescribe such rules of determination as they may think just and needful.”
Murray’s Lessee, 59 U.S. at 285.
The case involved collection of a debt owed to the U.S. government. Congress established an Act in 1820 to issue distress warrants to collect debts. In order to do so, Congress allocated to an executive tribunal the adjudication of claims against the federal government, what today may be considered the U.S. Court of Federal Claims. Murray’s Lessee established the legitimacy for the hearing and determination of these claims in an agency of the executive branch. The Court carefully distinguished between matters that involved public rights from those that are “subject of a suit at the common law, or in equity, or admiralty” which must be brought in the judiciary.
While Murray’s Lessee originated the public rights jurisprudence, the case was intended to carve out a narrow exception in which the federal government was a party to a dispute as a sovereign power. This narrow exception was substantially broadened in Crowell and subsequent cases.
Bakelite (1929) and Crowell (1932)
In 1929, the Court again reviewed the legitimacy of legislative courts, viz., the Court of Claims, in Ex parte Bakelite Corporation (279 U.S. 438 (1929)). As in the case of Murray’s Lessee, the Court of Claims is an administrative agency organized to adjudicate disputes to which the federal government is a party. Accordingly, a jury trial right, under the Seventh Amendment, is not applicable to a legislative court adjudicating a government claim. Nevertheless, the decisions of the legislative court are merely advisory, with an Article III court a final arbiter of claims. In effect, the Article I tribunal is merely a finder of act. “Legislative courts also may be created as special tribunals to examine and determine various matters, arising between the government and others, which, from their nature, do not require judicial determination, and yet are susceptible of it. . . . Congress may reserve to itself the power to decide, may delegate that power to executive officers, or may commit it to judicial tribunals.” (270 U.S. 438, 442) Following Murray’s Lessee, the Court in Bakelite observed:
“The Court of Claims is such a court. It was created, and has been maintained, as a special tribunal to examine and determine claims for money against the United States. This is a function which belongs primarily to Congress as an incident of its power to pay the debts of the United States. But the function is one which Congress has the discretion either to exercise directly or to delegate to other agencies.”
Bakelite, 270 U.S. at 442.
Nevertheless, the decisions of the Article I tribunal “are advisory only, and so without force as judicial judgments.” (270 U.S. at 444). These limits preserve the independence of Article III courts and narrow the dispute between the government and other parties to a “special court” limited to hearing a specific type of case involving the federal government. The allocation of disputes involving public rights, that is, those rights involving the federal government as a party, were made with the consent and discretion of Congress. Thus, Bakelite follows carefully in the footsteps of Murray’s Lessee.
While Murray’s Lessee and Bakelite clearly involve the legislative creation of administrative tribunals for adjudication of rights that involve the federal government, the Court in Crowell extends the public rights doctrine to other fields beyond the involvement of the government. This case involved worker’s compensation in maritime law. Congress may consign to administrative agencies or tribunals the role of fact-finder for convenience and utility. Following Murray’s Lessee, an issue of common law, a court of equity or admiralty is typically adjudicated in the Article III courts. However, following Bakelite, the Crowell court held that the findings of an admiralty tribunal sitting as a finder of fact may be reviewed by an Article III court, including by a jury. Recognizing a clear distinction between public rights in which the government is involved as a party, on the one hand, and “cases of private right, that is, of the liability of one individual to another under the law as defined” (285 U.S. at 51) on the other, the Crowell Court stated: “Proper maintenance of the federal judicial power in enforcing constitutional restrictions precludes a power in Congress to substitute for constitutional courts, in which the judicial power of the United States is vested, an administrative agency for final determination of facts upon which the enforcement of the constitutional rights of the citizen depend.” (285 U.S. at 47)
Thus, a clear distinction is made between an inferior Article I tribunal as a finder of fact and an independent judiciary that supplies a final determination of the matter. Nevertheless, the administrative procedures for fact finding require and are bound to uphold procedures that include “due notice, proper opportunity to be heard, and that findings are based upon evidence” (285 U.S. at 47), features that are commonly associated with elements of due process. In order to promote a tribunal’s convenience, despite being bound to principles of due process, procedures employed in a tribunal are not bound by federal district court rules of evidence, “provided substantial rights of the parties are not infringed” (285 U.S. at 48). In delineating the boundaries of the public rights domain, the Crowell Court stated:
“Familiar illustrations of administrative agencies created for the determination of such matters are found in connection with the exercise of the congressional power as to interstate and foreign commerce, taxation, immigration, the public lands, public health, the facilities of the post office, pensions, and payments to veterans.
“The present case does not fall within the categories just described, but is one of private right, that is, of the liability of one individual to another under the law as defined. But, in cases of that sort, there is no requirement that, in order to maintain the essential attributes of the judicial power, all determinations of fact in constitutional courts shall be made by judges. On the common law side of the federal courts, the aid of juries is not only deemed appropriate, but is required by the Constitution itself. In cases of equity and admiralty, it is historic practice to call to the assistance of the courts, without the consent of the parties, masters, and commissioners or assessors, to pass upon certain classes of questions, as, for example, to take and state an account or to find the amount of damages. While the reports of masters and commissioners in such cases are essentially of an advisory nature, it has not been the practice to disturb their findings when they are properly based upon evidence, in the absence of errors of law…”
Crowell, 285 U.S. at 51.
Clearly, then, the Crowell Court distinguishes between matters of common law adjudicated in the federal courts and matters that may be reviewed in administrative agencies. However, the Court is concerned mainly with the maintenance of due process in administrative tribunals.
“In relation to these basic facts, the question is not the ordinary one as to the propriety of provision for administrative determinations. Nor have we simply the question of due process in relation to notice and hearing. It is, rather, a question of the appropriate maintenance of the federal judicial power in requiring the observance of constitutional restrictions. It is the question whether the Congress may substitute for constitutional courts, in which the judicial power of the United States is vested, an administrative agency – in this instance, a single deputy commissioner – for the final determination of the existence of the facts upon which the enforcement of the constitutional rights of the citizen depend. The recognition of the utility and convenience of administrative agencies for the investigation and finding of facts within their proper province, and the support of their authorized action, does not require the conclusion that there is no limitation of their use, and that the Congress could completely oust the courts of all determinations of fact by vesting the authority to make them with finality in its own instrumentalities or in the executive department. That would be to sap the judicial power as it exists under the federal Constitution, and to establish a government of a bureaucratic character alien to our system wherever fundamental rights depend, as not infrequently they do depend, upon the facts, and finality as to facts becomes in effect finality in law.”
Crowell, 285 U.S. at 56.
The Crowell Court is thus concerned about the “essential demands of due process” and the limits of federal government authority. Enabling administrative tribunals to act merely as finders of fact, within the bounds of due process, and allowing for their findings to be reviewed in Article III courts, the issue of separation of powers is prominent in the preservation of the independence of the judiciary. By narrowing the public rights exception of restricted classes of cases, within constraints of due process and review, the Court preserved judicial independence and the sanctity of the jury trial right for the mass of cases involving private rights between private parties. Note that the Court, in NLRB v. Jones & Laughlin Steel Corp. 301 U.S. 1 (1937), reiterated the requirements of due process and Article III court review of administrative agency findings.
The classical public rights cases were generally limited to administration resolution of claims against the government or to fact-finding within the domains of executive agencies.
Other articles in the series:
- Patent Review in an Article I Tribunal Under the Public Rights Doctrine (Tues. 10/3)
- The Modern Public Rights Doctrine (Tues. 10/10)
- Private Rights and the Sanctity of an Independent Judiciary (Thurs. 10/12)
- Separation of Powers Constraints on Patent Invalidation (Tues. 10/17)
- PTAB Procedures for IPR Fail to Satisfy the Tests for Due Process (Thurs. 10/19)
- IPRs Unduly Harm Patent Holders and Benefit Big Tech Infringers (Tues. 10/24)
- AIA and PTAB Unconstitutional Under the Public Rights Doctrine (Thurs. 10/26)